CLARKSVILLE Tenn. – A non-profit agency based in Clarksville that doles out money for about 4,000 children’s breakfasts and lunches across Tennessee is paying the state back more than $253,000 that apparently was not used to reimburse child day-care centers for food money.

Meanwhile, Cherry Tree Food Program founder Patsy Simpson has been fired by the agency’s board of directors, which demanded she repay $13,900 it claims she “misappropriated” between April and May, according to board member and treasurer B. Lynn Morton.

The agency recently moved its offices out of Simpson’s Trenton Road home and as of Friday had not received the almost $14,000 it claims she owes them nor has she offered any explanation of how that money was spent, Morton said.

She was given until late August to do so but her employment was terminated Aug. 27 when she failed to provide the information, Morton said, and the board “lost confidence in her trustworthiness,” and in her ability to be Cherry Tree’s director, Morton said.

Feeding the hungry

Simpson founded Cherry Tree in 2000. Its mission is to act as a middleman between child-care centers and the Tennessee Department of Human Services, which provides money to programs like Cherry Tree to reach children at risk for hunger.

DHS receives its money from the USDA food program.

About a dozen programs like Cherry Tree operate in Tennessee. Child day-cares and, in some cases, adult day-cares get money to pay for meals for those who qualify based on income. Because those meals are paid for with tax dollars, they must follow guidelines. Each lunch must have a milk, protein and two vegetables. Each breakfast must include a milk, cereal and fruit.

The day-cares pay for those food items and then turn to the sponsoring agencies, like Cherry Tree, to reimburse them.

Anita Harper, who was hired as operations and finance director for Cherry Tree to help reorganize the agency after an outside audit found the $253,000 problem last summer, said Cherry Tree had been estimating in advance how much it would need to reimburse the day-cares it sponsors.

But often the amount it estimated was too high, and rather than send the extra money back to DHS, those funds accumulated in Cherry Tree’s account, Harper said.

Eventually the amount was well over $200,000.

Cherry Tree is audited every year by both the DHS and state Comptroller’s Office.

Harper said she is cooperating with an investigation by the Comptroller’s Office to determine where that money went. It could be that much of it went to program expenses, but 85 percent of its monies must go to pay for food and it is unclear how the accumulated surplus was spent, Harper said.

Cherry Tree entered into an agreement with DHS to pay back that money but, because it did not have enough to pay a lump sum, it agreed to pay $3,500 per month.

That does not mean there will be any empty plates at day-cares sponsored by Cherry Tree. Those include 250 day-cares run out of homes and 24 commercial facilities which together feed about 4,000 children across the state, with about 30 percent of them in Montgomery County.

“We have a lot of people who are nervous right now,” Harper said. “They want to know if Cherry Tree is going to be here. And Cherry Tree is going to be here. We have a staff that is committed to seeing that the program runs well.”

And it’s that staff of three full-time employees and four part-time employees who may be hardest hit by Cherry Tree’s predicament. The $3,500 that will be repaid to DHS every month will come from administrative costs, including salaries.

Employees have already taken a pay cut and those who had insurance through their job no longer do. The money Cherry Tree will be repaying the state amounts to about one year’s operational budget. The agency receives about $3 million per year but 85 percent of that goes to food and can’t be touched.

Harper thinks the Comptroller’s Office may be able to find where that money went or how it was spent. So far, Harper has not been able to reconcile the amounts paid out to expenses. That doesn’t mean there was fraud, just that money needs to be accounted for and more transparency is needed. She said there are checks and balances in the organization that will prevent fraud.

Problems across the state

The change in leadership and Comptroller’s audit of Cherry Tree come amid criticisms of the Department of Human Services for poor oversight of food programs intended to reach children at risk for hunger. DHS is responsible for operating the Child and Adult Care Food Program, as well as a summer food program for children — distributing close to $80 million in federal money to middlemen like Cherry Tree.

The DHS and Comptroller’s audits come at a time when agencies like Cherry Tree are being scrutinized across the state.

The Tennessee Comptroller found the programs rife with fiscal mismanagement, questioning millions of dollars in payments to some agencies. DHS officials say they have found improper bookkeeping and, in some cases, outright fraud.

But an ongoing investigation by The Tennessean in Nashville has found numerous agencies engaged in potentially fraudulent practices, including agency operators who paid themselves tens of thousands of dollars in bonuses and used agency funds for home improvements. The newspaper’s review found out-of-state operators, some with fraud convictions in other states, who moved to Tennessee to participate in the program only to pocket payments without feeding children.

DHS’ food program director, Carmen Gentry, resigned, saying the program was understaffed, had poorly trained workers and had no working computerized monitoring system, despite her repeated requests to DHS leadership for more resources.

Lawmakers also convened a special hearing, urging DHS to improve oversight. And federal officials have since visited Nashville to try and address ongoing problems.

Cherry Tree will go on

Morton, a Clarksville attorney, said Simpson treated Cherry Tree as if it was her own.

“She has had the opinion that it is her company,” Morton said. “But it is not. It’s a non-profit organization.”

She said she trusts the Comptroller’s Office to account for the $253,000 that was unaccounted for under Simpson’s directorship..

She said the food program run by Cherry Tree will go on and nothing will be cut that would reduce the number of people being fed. Cherry Tree is currently operating without a director.

“It obviously presents a hardship for Cherry Tree,” Morton said.

Tennessean reporter Anita Wadhwani, on Twitter @AnitaWadhwani,contributed to this story.

Reach reporter Stephanie Ingersoll at 931-245-0267 and on Twitter@StephLeaf.